Monday, February 25, 2008

Another Day Of Working With This Volatility

A lot of people wonder how in the world to make a trade in a market where choppy mood swings are an every day event. When
this happens, instead of blindly throwing money at a stock you think should run, you have to take into account what "could"
happen if you are on the wrong side of a huge drop.

What is the average trader to do? Well, during the worst volatility, sitting out is probably the wisest choice because you
can get so whipsawed it makes your head spin. But if you are one of the personality traits that says "I'll conquer this
volatility and anything else that gets in my way," here are some suggestions to help you do just that. First realize that
every average and every stock has a "trading range" that it goes through every day. For some issues it's only a 1/2 point,
but on some issues it can be much more. It becomes very necessary for you to look at some charts and get a feel for how much
your stock ranges in the course of normal trading before you can identify a move that is "outside" its "normal" course. So what do you do about that "abnormal" move? Do you sell in fear, or hold and hope? Here is a tip for you that may help.

Unless a stock has some fundamental reason to move higher such as a news release, a stock split, an upgrade, etc. it will
pretty much behave in step with the overall market. A "good stock" in the tech sector may be up nicely and moving well with
the NASDAQ up 20 points, but if the NASDAQ tanks, you can bet your stock will too. So, your tech stock that is now down
outside the "normal range" could certainly be there because the NASDAQ as a whole is now down 40 points. Now the question
really isn't "what's wrong with my stock" because the answer is nothing, the question is "what's wrong with the NASDAQ?"

This is where technical analysis actually becomes important and learning to spot support levels comes in. Let's say that your
tech stock that just took a beating has good support at a certain level. If the move down hasn't violated that support level,
keeping the trade in play probably isn't a bad idea since chances are the NASDAQ will have a move to the upside and bring
your stock back up with it. But, if the loss violates that support level, bailing out may be the best choice since so many
buy/sell programs are based on resistance and support that it could cause even more damage to the issue.

On the other hand, if the stock you were in was a pure momentum play and support is several points below, it is often wisest
to cut your loss quickly and get out while you can. When a momentum stock gets pulled back outside it "normal" range, it is
often a bad sign, no matter what the averages are doing. So, in times of big volatility, knowing where technical support
levels are in your particular stock, will often help you decide if you are still "okay" or about to get creamed.

Learn the basics of reading a chart and study them so you can recognize support and resistance in a heartbeat, they will ultimately help you a lot!

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More good news for those of us flipping houses....

Sales of existing homes fell to the lowest level in nearly a decade in January while the median price for a home dropped for the fifth straight month.

The National Association of Realtors said Monday that sales of single-family homes and condominiums dropped by 0.4 percent last month to a seasonally adjusted annual rate of 4.89 million units, the slowest sales pace on records going back to 1999.

The median price of a home sold in January slid to $201,100, a drop of 4.6 percent from a year ago.

The drop in sales and the fifth consecutive decline in prices underscored the continued pressure facing housing, which is struggling to emerge from its worst slump in a quarter-century.
Sales were weak in all parts of the country except the Midwest, where sales posted an increase of 3.4 percent. Sales dropped by 3.6 percent in the Northeast, 2.1 percent in the West and 0.5 percent in the West.

Sales of both existing homes and new homes tumbled for a second straight year in 2007 as the housing industry was battered by a severe credit crunch that hit in August as major financial institutions began reporting multibillion-dollar losses on their investments in risky subprime mortgages, loans made to homeowners with weak credit.

The market for subprime mortgages has essentially dried up and other types of loans have become harder to obtain as lenders have tightened their standards.

Lawrence Yun, chief economist for the Realtors, said he believed the housing market may be on the verge of bottoming out with a rebound expected to start toward the end of this year.
"Subprime loans and other risky mortgage products have virtually disappeared from the marketplace, and over the past five months, this has been reflected in soft but fairly stable home sales," he said.

He said he expected demand to be bolstered in coming months by the action of Congress in the economic stimulus bill to raise the caps on the size of loans that can be backed by Fannie Mae and Freddie Mac and the Federal Housing Administration.

The slump in housing that began in 2006 followed a boom period in which sales and prices had soared to record levels. Many economists believe that the sharp turnaround has severely depressed economic growth and boosted the odds that the country could fall into a full-blown recession.

Sunday, February 24, 2008

We always get what we accept in our life's, no doubt about it.

I love to eat out and some times the meal comes and it is not prepared the way I requested it.
Most people say nothing and when asked by their server how the mealis will reply Fine,
Not me.

I will not hesitate to send a dish back if it is not prepared as requested.
Now this occasions are rare but it does happen
You get in life what you accept.

Most people never send anything back and will eat whatever is brought out to them and never say a word to their server or the owner who stops by to check on how they are enjoying the meal.

They just accept whatever is brought out and afterwards take their business elsewhere and never eat there again.

Most owners know this and would rather you speak up if something is not exactly right with your meal because they that the people who are not satisfied and say nothing do not come back and they lose a customer.

Yet some folks will just accept whatever it is , no matter how bad it is, say nothing but never return.

Everybody loses in that situation. Why am I talking about this today?

Well, how does this example relate to your life in 2008?
What things in life were you served that you readily accepted and said nothing about?
Who served you up a plate of criticism that held you back in 2007?

How about the plate of fear that came out steaming hot that you did not send back?
Every day, people are serving us stuff that we have to be smart enough and tough and wise enough to say no to.

Some of you were served the plate of "who do you think you are having a dream that big?
Or "who are you trying to kid with becoming a real estate investor"

It does not matter how ridiculous it is, people always love to serve it up, the more negative the better it is.

And people just sit there and accept it and never send it back.

You get in life what you accept.

Remember, the number 1 passion of people who do not have dreams is to destroy and cut down the dreams of others who have the guts enough to dream and believe in themselves.

They do not have the guts to have a dream so now their time is spent belittling those that do.

When this happens to you in 2008 , send that mess back to where it came from.

You deserve to be honored, loved and respected as do your dreams.

Accept only the best in every area of your life in 2008, even in the little things.

Friday, February 1, 2008

Foreclosed-upon home, even ones....

... needing repair, can be a promising option for owner-occupant buyers.

Investors have been in the market for rehabilitating properties for years now. New buyers have entered the rehab market of late, however, and they are not in it merely for fun or profit. These buyers are looking at foreclosed-upon homes, even ones that need fixing up, to move into themselves.

With an ever-increasing number of foreclosed-upon homes entering the market -- about 750,000 in 2007, -- you may be interested in purchasing a foreclosed home in need of work, if you are going to live there.

Many buyers are afraid of further price declines if they buy a home at today's market value. In some cases, buyers simply can't afford a market-value home -- but they can afford the price of a foreclosed-upon home and the repair costs.

You must be familiar with options for the combination of construction and mortgage financing that you may need and how the process will work.

Financing options (borrow up to $25,000 without banks, tap here)

Owner-occupied buyers are not treated the same way as investor buyers. These buyers often are not inclined to pay the types of rates and fees a hard-money lender would offer.

Therefore, you are left with three options:

1. Private construction loans with a single or double close: Many banks have their own construction-loan products, and they typically offer a choice between a single or double close.
Single-close loans start at a higher "construction rate," and then, once the work is certified as completed, the rate drops for the life of the loan. With a double-close loan, borrowers close on a construction loan and then return to close a second end-loan for the home once work is complete.
2. Federal Housing Administration (FHA): FHA has two options for you. The standard FHA-backed loan, with a small repair escrow attached, will work for properties where needed repairs are limited to a few-thousand dollars and the appraisal supports the increased home value. To complete the funding, you will need to get three competitive contractor bids for completing the work and escrowing the funds.

If repairs exceed $5,000, however, then you will be eligible for the FHA 203(k). The 203(k) program has one significant additional requirement: the FHA-approved 203(k) consultant. Clients must pay for the consultant in advance and work with the consultant throughout the funding process.

Although a consultant creates an extra safeguard for clients, this person can also mean extra paperwork for the broker and additional delays.

3. Government-sponsored-enterprise (GSE) loans: Standard agency loans may be the best option for foreclosure buyers. GSEs offer single-close options with one low rate for the life of the loan. In addition, with the Fannie Mae HomeStyle product, borrowers can receive renovation funding equal to 50 percent of the "as completed" value of the home.

This can work in the borrowers' favor because with foreclosed homes there is typically a large discrepancy between the home's purchase price and its as-completed value. Therefore, a GSE loan may allow the borrowers to get their home with a minimal amount of cash invested upfront and give them a good equity position at the end of construction.

The loan process

When you find a home, you need to decide if it is viable from an economic perspective.
Is the home livable in its current condition? Has the home been damaged by fire? Is there evidence of mold? Is the home condemned?

A property that looks bad in photos will have a hard appraisal review and will need additional inspections -- if the loan even survives the review. If the property is fire-damaged, you'll likely need additional engineering reports. A property with mold might need an estimate for remedy costs and additional environmental certifications. If the property is condemned, the bank will want the condemnation lifted before it will finance.

You should know about the possibility of these additional fees. If the house is condemned, then you probably can't get traditional financing and should look for another home or consider using a hard-money lender.

If the property is a good candidate for bank financing, you need to get a contract with the bank of sufficient length to process the loan. Although construction loans normally take about 45 days, a 60-day contract is usually the best option. It allows for extra time for back and forth between the bank and the contractor, if needed.

Once a contract is in place, you need to get a bid from a bonded and licensed contractor and get a corresponding budget. The contract needs to specify the work to be completed and the phases of the project. The proposed budget must accurately follow this contract. You must prepare a credit package and send this to the bank, in addition to a separate project package containing the contract and budget.

The most common problem at this stage is reconciling the budget to the contract and ensuring that the contract adequately explains the work needed. Contracts and budgets do not need to include minutia such as nails or screws, but they do need to include things such as fixtures and the level of finishing that will be done in every phase.

Problems can also arise if you and the contractor start revising the contract verbally before closing. This happens frequently, and you must strongly guard against this. Everything should be in writing, and the contract the bank gets should reflect all work to be done.
You should never assume anything related to contractors and should always ask for clarifications. Have your attorney review all contracts.

After the final project approval and your credit-file conditions clear, you will receive your cost-to-complete information and can schedule a closing. The closing will reflect the construction money to be escrowed, along with inspection fees and other documents related to construction draws.

As the housing crisis continues and foreclosures mount, owner-occupant buyers will recognize the tremendous equity and safety they can gain from buying homes needing renovation.

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